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On Monday, Bernstein analysts, led by Daniel Roeska, reiterated their Underperform rating on Rivian Automotive Inc (NASDAQ:RIVN) with a price target of $6.10, well below the current trading price of $10.75. Roeska highlighted the challenges Rivian faces due to the current low penetration of Battery Electric Vehicles (BEVs) in the U.S. market and the company’s limited range of products. InvestingPro data shows the company’s weak financial health, with negative EBITDA of $3.66 billion and concerning gross profit margins of -24.14%. While BEV adoption and new models are expected to grow the U.S. addressable market to between approximately 1.3 million and 1.5 million units by 2030, and potentially to 6.7 million units by 2040, the analyst expressed concerns that this may not provide Rivian with sufficient scale in the long term. According to InvestingPro analysis, which offers 12 additional key insights about RIVN, the company’s revenue growth of 12.09% may not be sufficient to achieve sustainable profitability.
Roeska’s analysis suggests that even in the best-case scenario, where Rivian could sell around 500,000 vehicles per year by 2030, the company would only achieve a 15% gross margin and break even on EBIT and free cash flow. He predicts that until that time, Rivian is likely to burn through $16 billion in cash and face significant shareholder dilution, particularly due to the Volkswagen (ETR:VOWG_p) Joint Venture. This aligns with InvestingPro’s assessment, which shows the company’s free cash flow yield at -24% and indicates rapid cash consumption despite maintaining a strong current ratio of 4.7.
The analyst further cautioned that Rivian is expected to miss its 2026 EBITDA estimates by 30%, attributing this to a slower-than-anticipated ramp-up of new models, delays in cost reductions, and risks associated with the utilization of new production lines. Roeska’s valuation of Rivian is based on an "ambitious" 1.1x EV/Sales multiple of their 2030 revenue forecast, which has been discounted back to the present to arrive at the $6.10 price target. He indicated that the near-term catalyst for the company’s performance would likely be the shortfall in meeting its 2026 financial targets.
In other recent news, General Motors (NYSE:GM) reported a 9% year-over-year increase in U.S. volumes for February 2025, defying the overall industry trend of a 1.4% decrease. Bernstein highlighted GM’s effective pricing and inventory management strategies, which helped the company maintain momentum despite a general slowdown in the U.S. automotive sector. Meanwhile, Rivian Automotive appointed Sreela Venkataratnam as its new Chief Accounting Officer, bringing extensive experience from her previous role at Tesla (NASDAQ:TSLA). Rivian’s recent developments also include a maintained Buy rating from Stifel, with a $16 price target, as analysts acknowledge the company’s progress towards achieving significant financial milestones. Guggenheim Securities adjusted its price target for Rivian to $16, down from $18, while maintaining a Buy rating, citing mixed results from the company’s fourth-quarter financials. DA Davidson also revised Rivian’s price target to $13, emphasizing a neutral stance and highlighting the company’s efforts to increase marketing ahead of the R2 model launch. Rivian’s strategic partnerships, such as with Volkswagen, and its exploration of non-vehicle revenue streams are key elements in its business strategy as the company navigates the competitive electric vehicle market. These recent developments underscore the dynamic nature of the automotive industry, with companies like GM and Rivian taking varied approaches to growth and sustainability.
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